Mona Shah, assistant fund manager of the Rathbone Enhanced Growth portfolio, explains why ETFs are an ineffective way to access bond markets.
Investing in bond exchange traded funds (ETFs) looks relatively simple, but our research has found them to be more complex than equity ETFs, largely due to the fluctuating liquidity environment. Our conclusion is that ‘passive’ is a misnomer, as investment decisions can be implicit in these products. In the corporate bond space, we believe paying for active management is still best. Debt indices are weighted by market cap, so the most indebted companies have a larger weighting. These indices are ‘rules-based’ and rebalanced monthly, bar some corporate bond indices that are rebalanced ...
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